Stabilise retirement provision and make it sustainable

Retirement provision is facing major challenges: Life expectancy is increasing and people are having fewer children. Rising life expectancy means that pensions from state old-age and survivors’ insurance (OASI, first pillar) and occupational pensions (OPA, second pillar) are being paid out for ever longer periods. In addition, with OASI, the number of contributors per pension recipient is constantly decreasing due to baby boomers retiring and the birth rate falling, resulting in growing deficits without any countermeasures in place. And under the mandatory OPA insurance scheme, there is still an enormous redistribution of funds outside the system from working people to pension recipients, because the OPA conversion rate is much too high.

In a referendum on 3 March 2024, the popular initiative for a 13th OASI pension was accepted. When paid out for the first time in 2026, the costs of the 13th OASI pension will amount to around CHF 4.2 billion. Demographic factors will see this figure rise to around CHF 5.4 billion by 2040. On 19 June 2026, Parliament approved an increase in the standard rate of VAT by 0.4 percentage points from 2028 onwards. This would provide additional OASI funding of around CHF 1 billion to CHF 1.4 billion. The public will have the final say on the constitutional amendment required to increase VAT (referendum set for 29 November 2026). In 2026 and 2027, the 13th OASI pension will need to be financed in full by the existing OASI compensation fund in any case.

On 20 May 2026, the Federal Council launched the consultation procedure on the OASI 2030 reform, which will run until 11 September 2026. In order to secure OASI financing for the period from 2030 to 2040, it plans to increase income from current sources of financing (i.e. wage contributions and VAT). However it does not intend to introduce new sources of financing, such as a financial transaction tax, an inheritance tax or a property gains tax. To promote continued employment after the OASI reference age has been reached, the OASI maximum age of 70 is to be abolished, the deductible amount increased and reduction/increase rates modified. The Federal Council would also like to raise the minimum age for drawing age-related benefits in pillars 2 and 3a from 58 and 60 years, respectively, to 63 years (as under OASI). However, a higher reference retirement age is not an option for the Federal Council as part of the OASI 2030 reform. Its rationale for this, as mentioned previously, is that in 2024, the electorate clearly opposed an increase in the reference age in the referendum on the popular initiative for safe and sustainable retirement provision, which provided for linking retirement age to life expectancy. The Federal Council also argues that a general increase in the reference age would require a long transition period and compensation measures, which is why the increase would not have an impact on OASI finances early enough to ensure the financing of OASI from 2030.

The SIA is opposed to raising the minimum age for drawing age-related benefits under pillars 2 and 3a and considers an increase in the reference retirement age to be unavoidable. Against this backdrop, it is particularly in favour of an intervention mechanism that, once the OASI fund falls below a certain threshold, would provide primarily for an increase in the reference retirement age and, secondarily, for an increase in VAT.

On 22 September 2024, the Swiss population rejected the occupational pension reform (OPA reform). The aim of the reform was to strengthen the financing of the second pillar by reducing the OPA conversion rate from 6.8 per cent to 6.0 per cent, to maintain the overall level of benefits and to improve protection for part-time employees. A reduction in the OPA conversion rate would have improved the situation of OPA minimum and close-to-minimum pension funds. These pension funds rely on an appropriate OPA conversion rate in order to be able to avoid pension losses.

Pension funds that provide benefits above the mandatory level have made use of their flexibility and taken the necessary measures:

• All-inclusive pension funds have reduced the conversion rate to an average level of around 5.25 per cent.
• Pension funds that use the splitting model have modified it by reducing the statutory conversion rate for mandatory retirement assets to, for example, 6.0 or 5.5 per cent and by applying an actuarially correct conversion rate for supplementary retirement assets of approx. 4.3 to 4.5 per cent. 

On 1 June 2026, the Council of States referred postulate 26.3521 (SGK-S), ‘Potential for improvement in occupational pensions’, to the Federal Council. The Federal Council is now tasked with producing a report setting out how the OPA can be modernised in specific areas. The report is to cover various adjustments (reducing the number of crediting rates while lowering the highest rate, earlier saving, lowering the entry threshold and the coordination deduction, insurance for people in multiple jobs, better options for voluntary saving) while at the same time ‘identifying possible financing within the framework of the OPA and providing for any necessary compensation measures for transitional generations’.

From the SIA’s point of view, any reform must be structured and financed in a manner consistent with the system. Tightening the cross-financing of OPA benefits paid for by the working population cannot be an option. A reduction in the OPA conversion rate is therefore an unavoidable element of the financing analysis.

Beyond financial stabilisation, we should strive to make OASI and OPA sustainable. Long-term sustainable financing of retirement provision requires that the parameters (reference age, OPA conversion rate, OPA minimum interest rate) be set in line with actual conditions and adjusted in line with their development. The SIA supports relevant political initiatives.

Private life insurers manage around 11 per cent of occupational pension assets, insure roughly 42 per cent of actively insured persons (including pure risk insurance) and serve roughly 20 per cent of pension recipients (sources: FSO, Pension Fund Statistics 2024; FINMA, Data on Operating Statements for Occupational Pensions 2024).

Life insurers offer SMEs a comprehensive range of services. They compete actively with each other and with other pension providers. This is reflected, amongst other things, in varying investment returns, risk premiums and surpluses.

The Swiss Solvency Test (SST) has significantly stepped up the requirements for creating and maintaining solvency capital. The excessively high capital requirements mean that guarantees and risk cover become too expensive and can therefore no longer be offered, or only to a limited extent. Those who are exposed to the relevant risks can no longer obtain cover to meet their needs – or the risks have to be borne by the state. This is in direct contradiction to the previous occupational (and private) pension structure, which has been broadly supported in society. Further deterioration of the framework conditions would not be acceptable.